March M&A Roundup

Consolidation continued at a healthy pace in March, with noteworthy deals of various sizes and for various reasons­–financial and strategic–occurring across the sporting goods, outdoor and lifestyle brand verticals.

Here’s a recap of some of the deals that are likely to shift the landscape within their product categories and marketplaces.

The 411 ­– JD Sports announced plans to enter the U.S. marketplace through the acquisition of the beleaguered sneaker chain Finish Line for $588 million. With JD Sports behind it, Finish Line can now put Foot Locker in the company’s sights–something the retailer was unable to do alone.

Reaction – “For Finish Line, joining a scaled omnichannel retailer of premium athletic sportswear is looking more like a necessity amidst ongoing traffic pressures and formidable competition from Foot Locker, which has contributed to challenging financial performance as a standalone company.”– Jonathan Komp, Baird Equity Research

What’s next? – Komp sees the deal as “positive for the global brands,” with a likely stronger combined retailer in the U.S. market, but likewise sees an “incremental negative” for Foot Locker. He also believes Foot Locker may make a competing bid to block JD’s entry into its home market. Keep an eye on SGB Executive for the latest on this deal.

Reaction ­– “We are pleased to see that the Billabong shareholders recognized this value, and have approved the proposed acquisition. We have now cleared a significant milestone, and we are one step closer to creating the world’s leading action sports company. We look forward to uniting the Billabong and Boardriders communities and building a foundation to better showcase and grow the action sports industry.”– Dave Tanner, Boardriders CEO

What’s next? – Boardriders Inc., the parent of Quiksilver, Roxy and DC Shoes brands, adds another marquee brand to the company’s portfolio with Billabong, but can it revive a company that has seen financial struggles of late? The transaction is anticipated to close on or about April 24, subject to final approvals.

The 411 – Kathmandu, the outdoor retailer primarily active in New Zealand and Australia, said it had agreed to acquire Oboz Footwear, based in Bozeman, MO, for $60 million, plus an earn-out of up to $15 million. Kathmandu and Oboz have worked in partnership for over 10 years; Kathmandu has historically been the second customer of Oboz after REI since the brand launched in 2007. Kathmandu currently is the exclusive retailer of Oboz in Australia and New Zealand.

Reaction ­– “The acquisition of Oboz enables the Kathmandu Group to accelerate our international growth, and diversifies our product mix, geography and channels to market. I admire the success of Oboz in North America. They are an innovative and authentic outdoor brand with deep roots in Montana, driven by a passionate and successful team. It seems very natural that after so many years of close collaboration we deepen our relationship.”– Xavier Simonet, CEO, Kathmandu

What’s next? – John Connelly, president and founder of Oboz, wants people to understand two things about the pending sale of his company to Kathmandu: 1) Nothing much will change and 2) He has no plans to retire. “I’m going to be here to run Oboz for a while,” said Connelly in an interview with SGB Executive. “I still love it. We have great people here on the team and great customers.” He later added about the company’s path moving forward, “I think we need to keep doing what has made us successful. And that’s been a focus on quality fit service. We’re going to keep doing what we’ve been doing.”

Reaction ­– “We will look to license categories where merino would contribute to a significant performance outcome and nothing short of that. We are in the process of evaluating what these opportunities look like and encourage potential licensees to reach out to us if they have something special to contribute. We are making a big push into global and encourage anyone to reach out who can be valuable to that end.”– David Hazan, Flour Fund

What’s next? – According to a statement from Flour Fund, the group “will invest heavily into Ibex’s direct-to-consumer channel, and create delightful and thoughtful experiences for its loyal community. Flour Fund, in usual form, will also look to apply its renowned licensing model, typically applied to the brands it purchases. They will evaluate proposals from category experts seeking to license the brand and expand the Ibex product offering.”

Other deals from last month

Here are other notable deals that occurred in March (click the headline to read the full story on each):